Alvin Gilmore

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Promoters' frequently experience difficulty in obtaining a proper reward for their initiative in organizing a corporation. This difficulty arises from two well-established principles of corporation law. The first of these rules is that a promoter stands in a fiduciary relation to the corporation, charged with a duty to exercise the utmost good faith, as in cases of other trusts, so that he cannot lawfully make secret profits' in transactions relating to the promotion or organization of the corporation, and must account to the corporation for such profits if made.3 The second rule is that the promoter cannot lawfully receive compensation for his effort unless the corporation gives its approval after its organization has been accomplished.'